Keepin' It Real  

Economics, Housing, & Commercial Real Estate Analysis

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  • Alex Pettee, CFA

Daily Recap: Record Day | Rates Climb | Merger Monday

The S&P 500 ETF (SPY) climbed 0.6% to a new closing record high on Monday as the busiest remaining week of 2019 kicked off on a high note.  The stars align this week for a "data dump" that includes the monthly job report, the first look at third-quarter GDP, more than 140 S&P 500 earnings reports, and the critical Federal Reserve rate decision. The Nasdaq ETF (QQQ) gained 1.0% on the day, closing barely shy of new all-time records.

Coming off a week of uncharacteristic underperformance, real estate equities were again lower on the day as the 10-year Treasury Yield (IEF) ticked higher by another 5 basis points, closing at 1.85% which is at the top of the 3-month range, up from a low of 1.43% on September 3rd. The broad-based REIT ETF (VNQ) ended the day lower by 0.3%, led to the upside by the timber, manufactured housing, and hotel REIT sectors but dragged down by the cell tower, mall, and industrial REIT sectors.

Coming off a record weekly closing high, the Hoya Capital Housing Index, the benchmark that tracks the performance of the US housing industry, finished off by 0.5%, dragged down by a sell-off in the high-flying homebuilders. The home improvement retailers and real estate brokerage and technology firms led to the upside today with Re/Max (RMAX), Realogy (RLGY), Redfin (RDFN), and Zillow (Z) all delivering a strong day.

On the earnings slate among US Housing Index components this afternoon is home building products and materials companies Simpson (SSD), Leggett & Platt (LEG), PotlaticDeltic (PCH), Trex Companies (TREX), and Cavco (CVCO) as well as apartment REIT AvalonBay (AVB), and senior housing REIT Welltower (WELL).

Last night, industrial REIT stalwart Prologis (PLD) announced a deal to acquire Liberty Property Trust (LPT) in an all-stock deal valued at about $12.6B. Prologis plans on selling about $3.6B in assets - roughly $2.8B worth of non-strategic logistics assets, and $700M of office properties. Prologis ended the day down by more than 5% while Liberty ended higher by nearly 14%. 

For the commercial real estate industry, the business week of earnings season kicks off today with reports from Alexandria (ARE), Brixmor (BRX), Healthcare Trust of America (HTA), Corporate Office (OFC), SBA Communications (SBAC), and Vornado (VNO), in addition to the housing REITs mentioned above. We'll have full coverage of earnings season on the iREIT on Alpha Marketplace.

As discussed in our Weekly Outlook, the "data dump" of economic data begins tomorrow with Case Shiller Home Prices and Pending Home Sales. Rest up, because on Wednesday, we'll see the first look at third-quarter GDP right in the morning before the critical Fed interest rate decision in the afternoon. On Thursday, we'll see PCE inflation data, and then on Friday, we'll get a look at the nonfarm payrolls report for October. Throughout the week, we'll hear from more than 140 S&P 500 companies in the busiest week of earnings reports this quarter. Buckle up.

For an in-depth analysis of all real estate sectors, be sure to check out all of our quarterly reports: Apartments, Homebuilders, Student Housing, Single-Family Rentals, Manufactured Housing, Cell Towers, Healthcare, Industrial, Data Center, Malls, Net Lease, Shopping Centers, Hotels, Office, Storage, Timber, and Real Estate Crowdfunding.

Hoya Capital is excited to announce that we’ve teamed up with iREIT to cultivate the premier institutional-quality real estate research service on Seeking Alpha! In addition to having access to all of iREIT's existing offerings including REIT Ratings on 100+ companies, model portfolios, and much more, iREIT subscribers will now get exclusive access to our expanded real estate coverage including:

Disclosure: An investor cannot invest directly in an index and index performance does not reflect the deduction of any fees, expenses or taxes. The information presented does not reflect the performance of any fund or other account managed or serviced by Hoya Capital Real Estate. We consider the information in this presentation to be accurate, but we do not represent that it is complete. It should not be relied upon as the sole source of suitability for investment. Please consult with your investment, tax or legal adviser regarding your individual circumstances before investing. Visit our website for a complete definition of all indexes cited in this report. Investing involves risk and loss of principal is possible.

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Hoya Capital Real Estate, LLC

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Hoya Capital Real Estate ("Hoya Capital") is an SEC-registered investment advisory firm that provides investment management services to ETFs, individuals, and institutions, focusing on portfolio and index management of publicly traded securities in the real estate industry. It is not possible to invest directly in an index. Index performance cited in this website or commentary does not reflect the performance of any fund or other account managed or serviced by Hoya Capital Real Estate. Nothing on this site nor any published commentary by Hoya Capital is intended to be investment, tax, or legal advice or an offer to buy or sell securities. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy and should not be considered a complete discussion of all factors and risks. Data quoted represents past performance, which is no guarantee of future results. Investing involves risk. Loss of principal is possible. Investments in companies involved in the real estate and housing industries involve unique risks, as do investments in ETFs, mutual funds, and other securities. Hoya Capital has no business relationship with any company discussed/mentioned. Hoya Capital never receives compensation from any company discussed/mentioned. Hoya Capital, its affiliate, and/or its clients and/or its employees may hold positions in securities or funds discussed on this website and our published commentary. A complete list of holdings and other important disclosures and definitions are available by clicking the links below.

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